June 25, 2009

When Should You Offer Free Shipping?

It's a question I'm often asked - Should I offer free shipping? Is that a smart business decision?

Bottom line, it's a good business decision if it helps you earn more money.

Yes, there's also the appreciation from customers, especially women, who love free shipping. But I'm in the business of helping businesses who market to women earn more money.

One reason why you add free shipping is to increase your average order size. Is your average order size $50? Than why not offer free shipping for orders over $55.

Lindiskin Free Shipping Example

Lindiskin is currently running an offer of free shipping for orders over $55. Why $55? Here's what I suspect is the answer - their average order size is probably around $50.

Look at the product price list. See how many products are priced at $25.

Many women feel if you're going to order online, order at least a quantity of two to make it worth your while. So, my guess is many orders come in at $50.

By making the free shipping offer good for orders over $55, there's a good likelihood that she will buy more than usual in order to get the free shipping.

Look at your average order amounts and past buying habits of your customers. Is there a price minimum for free shipping that could trigger her to increase her average order size and buy more from you than she normally would?

Comments

I know that I'll often check to see whether Amazon Prime covers a product before ordering it from another site, just because I want my free 2-day shipping.

Since LindiSkin sells consumable products, do you think they might do better with some kind of free-shipping for auto-shipped orders type thing, where signing up for 6 months of product to be shipped and billed on a monthly basis would give you free 2-day shipping or something?